Consumer goods companies are facing new, profound challenges. For incumbents, it is a time of existential crisis. Growth has stagnated.

Consumers are engaging and buying in new ways. Digital disruptors are changing the rules of the game. One thing is certain, future growth doesn’t look like the past.

Growth is declining for legacy leaders
Eighty-six percent of incumbents are averaging revenue compound annual growth rate (CAGR) of less than 1 percent. Legacy practices—pulling the levers of product, customer and channels—aren’t reversing the decline.

Liquid expectations are raising the bar
As digital brands proliferate, they are setting higher standards. Consumers expect rich, highly personalized experiences with no friction—regardless of business or brand.

A digital “earthquake” in retail is imminent
Traditional retailers will continue to lose their grip on consumers, as digital disruptors, like Amazon, vie for dominance at the local level.

As a result, consumers are in a constant state of re-appraisal, demanding that businesses remain relevant in every micro-moment between sales and service. As market dynamics are increasingly shaped by digital players and startups who are radically customer centric, incumbents are losing their capacity to attract, engage and retain customers.

Consumers expect rich, highly personalized experiences with no friction—regardless of business or brand.

New strategies increase complexity and risk

Acting like a startup is no easy feat for the big players. Incumbents don’t have the luxury that small brands do to organically test-and-learn their way forward.

They need to navigate a significant rise in complexity in all aspects of their business in order to innovate, incubate, and scale with speed, precision, and predictability. Personalization will require real-time insights and more digital interactions with customers. Customized products will require new manufacturing capabilities. Localization will require many more stock-keeping units (SKUs).

To manage the complexity, they need to become data-driven organizations. They need to gather insights across all functions to identify new opportunities, break silos that produce generic experiences and enable the workforce to work smarter. They need to unify everything from demand generation, to purchase, to servicing. And, they need to do it in a cost-effective manner to unlock capital for continuous innovation.

Incumbents need to navigate a significant rise in complexity in all aspects of their business in order to innovate, incubate, and scale with speed, precision, and predictability.

Microbrands are modeling new growth strategies

Large consumer goods and services (CG&S) brands can learn something from their small, but mighty competitors. Digital disruptors and microbrands are creating new opportunities to grow by getting closer to the customer.

To do so, they focus on individual consumers, customizing products, and adapting to local opportunities. They are:

Super-personal in how they interact – They understand the individual, not a segment, to tailor the portfolio, message, and activation for each and every moment.

Super-granular in how they deliver – They obsessively map the market to localize product and execution, outlet by outlet, aisle by aisle.

Intelligent and integrated – They leverage data to make decisions and unify operations. In the process, they debunk category myths, create new ideas and create premium customer experiences.

As such, they are reinventing consumer relevance, identifying pockets of growth, and developing new brands, products, and services to fit all needs, occasions, and locations.

A data-driven, AI- powered path to new growth

Intelligent technologies, like artificial intelligence (AI) and machine learning, are providing companies with a new capability to harness the power of their data and master this complexity.

They can capture and process vast quantities of data with great granularity in real time to meet individual customer needs. AI will enable companies to become hyper-relevant with everything they do. And, it will empower them to identify and deliver on countless new growth opportunities.

The integration of AI will help:

Unify across functions and improve performance

Discover new opportunities for growth

Digitize operations to increase efficiency and unlock working capital

Create 1:1 hyper-relevant experiences within an integrated ecosystem

Using AI to unify around the consumer and reinvent relevance, companies will develop a powerful new capability to retain and expand their customer base, reduce costs, differentiate competitively and drive new growth. Furthermore, AI will help them set ever-increasing standards of performance by continuously optimizing interactions and transactions—creating a self-perpetuating path to growth.